Almost a sixth of assets under management (AUM) is now provided through direct plans, forcing investors to invest without the help of distributors.
The share of these plans among stock programs has increased by around 7 percentage points, from 9.6% to 16.6% in the past five years, according to the latest data from Value Research for the quarter ended. in March. A year ago, that figure stood at 15.5%.
The percentage of direct investments in equity programs could rise further, as high net worth investors increasingly channel their money through registered investment advisers and wealth management companies. The move towards digitalization in the aftermath of last year’s pandemic could also prompt a move to live, experts said.
The overall share of direct plans across all plans, including debt and hybrids, stood at 39.2% at the end of March this year, a slight decrease from 39.6% last year. last year. This figure was 36.7% five years ago.
Most of the money in debt assets comes from institutional investors.
Direct plans allow investors to bypass distributors and save on commissions. These have a higher net asset value than the regular plans, and the expense ratio is also lower. Investors can save 80 to 100 basis points in direct stock plans compared to common stock plans.
The Securities and Exchange Board of India had in the past expressed concerns about the quiet response to these plans. He had also pointed out a few times that the difference between regular and direct plans was not equivalent to the distribution commission in some plans.